{"format":"alysly-page/1","url":"https://alysly.com/learn/small-cap-value/","json":"https://alysly.com/json/learn/small-cap-value/index.json","lang":"en-US","title":"Small Cap Value: A Factor Premium With Long Dry Spells","description":"Small and cheaply valued companies added return in historical studies, but not in every decade. The factor ETFs in the catalog with their holdings.","published":"2026-07-13T11:24:42+02:00","modified":"2026-11-01T18:26:04+01:00","alternates":[{"lang":"de-DE","url":"https://alysly.com/de/lernen/small-cap-value/","json":"https://alysly.com/json/de/lernen/small-cap-value/index.json"}],"about":"Machine-readable version of the page at url. It contains the text, tables and key figures published there, but not the interactive charts and tools.","breadcrumb":[{"name":"Investing & Trading Basics","url":"https://alysly.com/learn/"},{"name":"Level 0","url":"https://alysly.com/learn/#level-0"},{"name":"Small Cap Value: A Factor Premium With Long Dry Spells","url":"https://alysly.com/learn/small-cap-value/"}],"content":[{"type":"paragraph","text":"Level 0 Investing & ETF Basics · Part 14/16"},{"type":"heading","level":1,"text":"Small Cap Value: A Factor Premium With Long Dry Spells"},{"type":"paragraph","text":"By Alexander Bock, founder and data analyst","links":[{"text":"Alexander Bock","href":"https://alysly.com/about/"}]},{"type":"paragraph","text":"Two of the most thoroughly researched return factors are size (small companies) and value (cheaply valued companies). Combined as “Small Cap Value”, they are usually used as an addition to a broad core."},{"type":"image","src":"https://alysly.com/img/ta/size-value-grid.91b255474b6d3e209bb2c1eee26bc88f5a25ce42f7fd2623b2df02f2e4c1ec79.webp","alt":"Grid of four fields by company size and valuation style, with the field for small, cheaply valued companies highlighted"},{"type":"paragraph","text":"Two axes, four fields: (1) large growth stocks, (2) large value stocks, (3) small growth stocks, (4) small, cheaply valued companies. \"Small cap value\" means field 4. Broad world indices weight by market value and are therefore dominated by fields 1 and 2."},{"type":"paragraph","text":"The funds in the catalog with their current holdings:"},{"type":"list","ordered":false,"items":[{"text":"iShares MSCI World Small Cap: the small-cap segment of the world index","links":[{"text":"iShares MSCI World Small Cap","href":"https://alysly.com/markets/etfs/ishares-msci-world-small-cap-ucits-etf-usd-acc/"}]},{"text":"iShares Edge MSCI World Value Factor: the value tilt","links":[{"text":"iShares Edge MSCI World Value Factor","href":"https://alysly.com/markets/etfs/ishares-edge-msci-world-value-factor-ucits-etf/"}]}]},{"type":"paragraph","text":"Compared with the plain MSCI World, both hold far fewer large tech names and more industrials and financials.","links":[{"text":"MSCI World","href":"https://alysly.com/markets/indices/msci-world/"}]},{"type":"heading","level":2,"id":"the-limitation","text":"The Limitation"},{"type":"paragraph","text":"The extra return measured in studies was very unevenly spread over time. Small Cap Value trailed the overall market for more than a decade, for example in the 2010s. Whether a factor premium will persist is disputed in the research."},{"type":"heading","level":2,"id":"what-counts-as-small-and-cheap","text":"What Counts as Small and Cheap"},{"type":"paragraph","text":"At MSCI, small caps are a country’s smallest companies that together make up about 14% of the free-float market value. Value is measured by ratios such as price-to-book. Small cap value is the overlap: small companies that are also cheaply valued."},{"type":"heading","level":2,"id":"why-a-premium-might-exist","text":"Why a Premium Might Exist"},{"type":"paragraph","text":"Research offers two explanations. In one, small, cheap companies carry higher risks, for example in downturns or when raising money. Investors are paid for that with a higher expected return. In the other, investors systematically undervalue such firms out of habit or caution. Which explanation holds helps decide whether the premium persists."},{"type":"heading","level":2,"id":"two-funds-do-not-make-the-overlap","text":"Two Funds Do Not Make the Overlap"},{"type":"paragraph","text":"A small-cap ETF next to a value ETF does not add up to small cap value. The pair holds small companies of every valuation plus large cheap companies; the overlap is only part of it. The ETF overlap check shows how two funds overlap, and the portfolio X-ray shows the combined allocation of several funds.","links":[{"text":"ETF overlap check","href":"https://alysly.com/tools/etf-overlap/"},{"text":"portfolio X-ray","href":"https://alysly.com/tools/portfolio-xray/"}]},{"type":"heading","level":2,"id":"what-an-addition-means-in-a-portfolio","text":"What an Addition Means in a Portfolio"},{"type":"paragraph","text":"Adding small cap value means deliberately deviating from the overall market. That deviation, the tracking error, can run in the same direction for a decade. It is the price of a possible premium, and it cannot be calculated away in advance."},{"type":"paragraph","text":"Information only, not investment advice."},{"type":"list","ordered":false,"items":[{"text":"Previous Factor ETFs: Value, Quality, Growth & Small Cap","href":"https://alysly.com/learn/factor-etfs/"},{"text":"Next The Pension Gap: Calculating Capital Needs and Withdrawals","href":"https://alysly.com/learn/pension-gap/"}]},{"type":"heading","level":2,"text":"Indices"},{"type":"table","caption":"Indices, performance over the selected period","columns":["Index","1M"],"rows":[[{"text":"Dow Jones","href":"https://alysly.com/markets/indices/dow-jones/"},{"text":"+1.7%","data":{"m1":"+1.7%","m3":"-1.4%","m6":"+4.5%","ytd":"+7.6%","max":"+30.1%"}}],[{"text":"S&P 500","href":"https://alysly.com/markets/indices/sp500/"},{"text":"-0.9%","data":{"m1":"-0.9%","m3":"+1.2%","m6":"+4.9%","ytd":"+10.8%","max":"+35.8%"}}],[{"text":"MSCI World","href":"https://alysly.com/markets/indices/msci-world/"},{"text":"-0.8%","data":{"m1":"-0.8%","m3":"+0.6%","m6":"+4.0%","ytd":"+10.2%","max":"+35.3%"}}],[{"text":"MSCI ACWI","href":"https://alysly.com/markets/indices/msci-acwi/"},{"text":"-1.7%","data":{"m1":"-1.7%","m3":"-0.2%","m6":"+2.9%","ytd":"+10.3%","max":"+41.7%"}}]]},{"type":"heading","level":2,"text":"ETFs"},{"type":"table","caption":"ETFs, performance over the selected period","columns":["Fund","1M"],"rows":[[{"text":"SPDR S&P 500 ETF Trust SPY","links":[{"text":"SPDR S&P 500 ETF Trust","href":"https://alysly.com/markets/etfs/us/spy/"}]},{"text":"-0.9%","data":{"m1":"-0.9%","m3":"+1.2%","m6":"+4.9%","ytd":"+10.8%","max":"+35.8%"}}],[{"text":"Vanguard S&P 500 ETF VOO","links":[{"text":"Vanguard S&P 500 ETF","href":"https://alysly.com/markets/etfs/us/voo/"}]},{"text":"-0.9%","data":{"m1":"-0.9%","m3":"+1.2%","m6":"+4.9%","ytd":"+10.8%","max":"+34.3%"}}],[{"text":"iShares Core MSCI World UCITS ETF USD (Acc) EUNL","links":[{"text":"iShares Core MSCI World UCITS ETF USD (Acc)","href":"https://alysly.com/markets/etfs/ishares-core-msci-world-ucits-etf-usd-acc/"}]},{"text":"-0.8%","data":{"m1":"-0.8%","m3":"+0.6%","m6":"+4.6%","ytd":"+10.9%","max":"+489.0%"}}],[{"text":"Xtrackers MSCI Emerging Markets UCITS ETF 1c XMME","links":[{"text":"Xtrackers MSCI Emerging Markets UCITS ETF 1c","href":"https://alysly.com/markets/etfs/xtrackers-msci-emerging-markets-ucits-etf-1c/"}]},{"text":"-6.3%","data":{"m1":"-6.3%","m3":"+2.4%","m6":"+0.7%","ytd":"+15.2%","max":"+95.2%"}}]]},{"type":"heading","level":2,"text":"Stocks"},{"type":"table","caption":"Stocks, performance over the selected period","columns":["Stock","1M"],"rows":[[{"text":"NVIDIA Corporation NVDA","links":[{"text":"NVIDIA Corporation","href":"https://alysly.com/markets/stocks/nvidia-corporation/"},{"text":"United States","href":"https://alysly.com/markets/stocks/browse/?country=United%20States"}]},{"text":"-10.4%","data":{"m1":"-10.4%","m3":"+1.9%","m6":"+3.1%","ytd":"+9.7%","max":"+60.6%"}}],[{"text":"Apple Inc. AAPL","links":[{"text":"Apple Inc.","href":"https://alysly.com/markets/stocks/apple-inc/"},{"text":"United States","href":"https://alysly.com/markets/stocks/browse/?country=United%20States"}]},{"text":"+3.5%","data":{"m1":"+3.5%","m3":"+11.6%","m6":"+23.0%","ytd":"+26.8%","max":"+51.4%"}}],[{"text":"Tesla Inc. TSLA","links":[{"text":"Tesla Inc.","href":"https://alysly.com/markets/stocks/tesla-inc/"},{"text":"United States","href":"https://alysly.com/markets/stocks/browse/?country=United%20States"}]},{"text":"+12.7%","data":{"m1":"+12.7%","m3":"+28.5%","m6":"+2.3%","ytd":"-11.1%","max":"+65.9%"}}]]},{"type":"paragraph","text":"Data note 1","href":"#dn-1"},{"type":"heading","level":2,"text":"More Studies"},{"type":"list","ordered":false,"items":[{"text":"Jul 21, 2026 Collectibles ×5.4 for the same cards, matched-model index, Mar 2022 – Aug 2026 Is the Pokémon Card Market in a Bubble? 4,159 Sales Analyzed Prices for PSA-graded cards multiplied. Measured on the same cards they rose 438%, while the raw median shows 786% because pricier cards came up for sale later.","href":"https://alysly.com/analysis/pokemon-card-market-bubble/"},{"text":"May 19, 2026 Crypto 45.6% Bitcoin’s annualized volatility, Jul 2024 – Sep 2026 Bitcoin in Investment Portfolios: The Real Numbers Bitcoin is calmer than it was and still about three times as volatile as the stock market. It moves with stocks, not with gold.","href":"https://alysly.com/analysis/bitcoin-investment-portfolios/"},{"text":"Mar 17, 2026 Wealth €1.2m needed for €3,000 a month indefinitely at a 3% real return Living Off Your Returns: What It Really Takes The capital you need is arithmetic. The return you assume is a guess, and it can triple the answer.","href":"https://alysly.com/analysis/living-off-returns/"}]},{"type":"paragraph","text":"View all studies","href":"https://alysly.com/analysis/#studies"},{"type":"heading","level":2,"text":"Learn"},{"type":"list","ordered":false,"items":[{"text":"The Pension Gap: Calculating Capital Needs and Withdrawals How much capital a given retirement budget requires and how long a portfolio lasts with regular withdrawals – with two calculators.","href":"https://alysly.com/learn/pension-gap/"},{"text":"How to Read a Chart Chart types, timeframes, axes – and what a chart always leaves out.","href":"https://alysly.com/learn/reading-a-chart/"}]},{"type":"paragraph","text":"Course overview","href":"https://alysly.com/learn/"},{"type":"paragraph","text":"Updated Nov 1, 2026 · Content and figures checked Nov 1, 2026"},{"type":"heading","level":2,"id":"note-legend-h","text":"Data Notes"},{"type":"paragraph","text":"All calculations run automatically and are not investment advice."},{"type":"list","ordered":true,"items":[{"id":"dn-1","text":"Returns computed automatically from the price series, excluding dividends, taxes and costs."}]},{"type":"paragraph","text":"Data and methodology: Alysly · Responsible for content: Alexander Bock","links":[{"text":"Alysly","href":"https://alysly.com/methodology/"},{"text":"Alexander Bock","href":"https://alysly.com/about/"}]},{"type":"paragraph","text":"View all data notes","href":"https://alysly.com/notes/"}],"structured_data":[{"@context":"https://schema.org","@graph":[{"@type":"Organization","@id":"https://alysly.com/#org","name":"Alysly","url":"https://alysly.com/","logo":{"@type":"ImageObject","url":"https://alysly.com/img/icon-512.png","width":512,"height":512},"description":"Data-driven insights, transparent analysis and powerful tools for long-term investors.","email":"mail@alysly.com","contactPoint":{"@type":"ContactPoint","contactType":"customer support","email":"mail@alysly.com","availableLanguage":["de","en"]},"address":{"@type":"PostalAddress","addressLocality":"Haltern am See","postalCode":"45721","addressCountry":"DE"},"founder":{"@id":"https://alysly.com/#founder"},"sameAs":["https://www.linkedin.com/company/alyslycom/","https://www.youtube.com/@alyslycom","https://x.com/alyslycom"],"publishingPrinciples":"https://alysly.com/methodology/"},{"@type":"Person","@id":"https://alysly.com/#founder","name":"Alexander Bock","jobTitle":"Founder and data analyst","url":"https://alysly.com/about/","sameAs":["https://www.linkedin.com/in/abxk/"]},{"@type":"WebSite","@id":"https://alysly.com/#site","url":"https://alysly.com/","name":"Alysly","alternateName":"Alysly Investment Analysis","inLanguage":"en-US","publisher":{"@id":"https://alysly.com/#org"},"potentialAction":{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https://alysly.com/markets/stocks/browse/?q={search_term_string}"},"query-input":"required name=search_term_string"}},{"@type":"WebPage","@id":"https://alysly.com/learn/small-cap-value/#webpage","url":"https://alysly.com/learn/small-cap-value/","name":"Small Cap Value: A Factor Premium With Long Dry Spells – Alysly","description":"Small and cheaply valued companies added return in historical studies, but not in every decade. 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